EAST FERRY, Ireland — A bold plan by one of Ireland’s largest dairy businesses to shield itself from Brexit has hit a road block: angry locals.

The fight over the €77 million Dairygold project neatly encapsulates the difficulties Ireland faces as its closest trading partner leaves the EU single market. The U.K. buys €4.5 billion of Irish food and drink exports a year, roughly 35 percent of the total — a market at risk under the feared scenario of high customs tariffs between the U.K. and Ireland after Brexit.

Businesses hedging against the possibility of increased trade friction are looking further afield. For the Dairygold cooperative, the plan is to shift production from making cheddar destined for British consumers to cheese popular in new markets — in this case, Norwegian Jarlsberg for North America, Australia and the rest of the EU.

The Irish firm has teamed up with Tine SA, Norway’s largest farmer-owned dairy cooperative, to build a new plant capable of processing 20,000 tons of Jarlsberg a year.

But the project, which was granted planning permission last month on a site in the village of Mogeely in County Cork, has raised fierce local objections.

Up to 65 percent of Ireland’s cheddar cheese exports go to the U.K.

Residents are worried the factory’s outflow from a 10.6 kilometer underground pipeline will pollute the pristine waters in the tranquil Ballinacurra River estuary, harming wildlife, salmon stocks, an oyster farm and children in the local rowing club who use the bay.

“If you have the wind blowing here and you come down and see those windows, you’ll see all the salt water on them. Now they’ll have grease as well,” says Benedict Deady, who jokes that he was named after the pope and has run the local rowing club for the past six years. “It’s oil and stuff that they’ll be pumping into this place,” he said, voicing local people’s worst fears about what will be coming down the pipe if the project goes ahead.

Conor Galvin, head of commercial business development and innovation at Dairygold, said the factory’s waste will fully comply with environmental rules. He points out that An Bord Pleanála, Ireland’s urban planning authority, as well as the country’s water and environmental bodies have signed off on the project.

“The waste is treated in a way that the Irish water authority and the EPA [Environmental Protection Agency] say they are happy with and it is compliant with standards in Ireland,” he says, adding that he expects work to start on the factory within three months.

The Ballinacurra river estuary in County Cork | Simon Marks

Charlie Haynes, a member of the residents’ group in East Ferry fighting the project, says discussions are underway among locals about appealing the planning decision to Ireland’s Supreme Court.

That happened in the case of Apple’s planned €850 million investment in a data center in Athenry, near Galway, which was approved in February 2015 and was fought by locals through the courts for years.

“There’s salmon that goes up there in season. There’s sea bass, which is a protected species. There’s otters here, there’s kingfishers. It’s a place full of wildlife and we would be very suspicious of anything that might damage the water further,” Haynes says during an interview in his garden surrounded by his three dogs.

Like several locals here, Haynes says wastewater pumped into a thin stretch of inland water that his home overlooks would never make its way out to the ocean due to strong currents and a narrow mouth leading out to sea from the nearby harbor, instead remaining trapped. “All local experience is that things don’t go out,” he says.

Bad timing

The Dairygold venture comes at a difficult time for the industry. Up to 65 percent of Ireland’s cheddar cheese exports go to the U.K. along with large shipments of butter and infant formula. In total, 30 percent of Ireland’s dairy production is sold to the U.K, according to Bord Bia, the Irish Food Board.

Interviews with farmers and executives at some of Ireland’s largest dairy companies paint a familiar picture. In a nutshell, there is no obvious panacea for Ireland’s exposure to the British market should Brexit trade talks go sour.

Larry Hannon tends to his herd of cows on his farm in County Kildare | Simon Marks

“You can’t think you’re going to shift big volumes into the European market overnight because the market is already supplied. Just take Emmental, it’s a French thing and there are French companies doing it. Why go into a market that’s probably overcrowded anyway?” asks Padraig Walsh, who rears more than 300 cows in the Irish midlands selling 80,000 tons of milk powder per year to Glanbia, the country’s largest cooperative.

Walsh, who was president of the Irish Farmers’ Association between 2006 and 2010, says that while Ireland is increasing exports to countries beyond the U.K., nothing can quite make up for the benefits of trade access to the U.K.

“The U.K. market is so important to us as it has a similar taste. And also it’s so close, it’s the same culture, the same language,” he says. “Fair enough, we’ve managed to develop markets all over the place at this stage, but you won’t shift the volumes [going to the U.K.].”

For many farmers in Ireland, the idea of diversifying into new markets is something they have little control over as they are wholly dependent on the country’s cooperatives to market the products derived from their milk.

“At farm level we’re all very focused on producing more of the same thing. It’s a very narrow focus. It’s about volume as opposed to markets,” says Larry Hannon, who supplies 1.4 million liters of liquid milk to Glanbia from his farm in Ballitore, County Kildare. “Am I looking at changing my business to mitigate against Brexit? No, because there is nothing I can do to do that,” he says, tucking into a plate of Irish steak, potatoes and grilled tomatoes in his kitchen.

Lannon explained that producing more infant milk formula for the Asian market is often cited as a way to shelter the dairy market from Brexit. But doing so requires producing and selling huge volumes to add value for farmers, as the margins are so low.

“You’re talking big volumes,” he says, noting that Dairygold’s decision to produce Jarlsberg is a rare tale of hope for Irish farmers trying to hedge their bets in light of Brexit. “To add real value to my bottom line, I don’t know where that’s going to come.”

New markets

While farmers have doubts about the future, those in the government are more optimistic. Shane Hamill, who overseas Brexit issues and international trade at Bord Bia, says the country’s dependency on the U.K. is in fact decreasing.

Exports to the EU not including the U.K. increased by 16 percent to €4 billion in 2017, while exports to the rest of the world went up by 17 percent to €4.1 billion. Meanwhile, exports to the U.K. grew just 7 percent in the same year. So Ireland’s food exports to the U.K. made up for 35 percent of the total in 2017, down from 37 percent the previous year.

Hamill says Bord Bia has implemented a “massive market diversification exercise” with industry looking at consumer trends, market dynamics, the cost of doing business, regulatory issues and distribution channels in markets in Asia, the Middle East and Africa. The body has also opened the Thinking House, a resource center for businesses looking to access new markets.

The production site for the Dairygold cooperative in Mogeely, County Cork | Simon Marks

Glanbia, he says, is looking at producing more of cheeses such as Edam and Gouda, while Teagasc, the Agriculture and Food Development Authority, has partnered with Ornua, a huge marketer of Irish dairy products, to research the kind of tastes and textures of dairy products enjoyed in China.

“There are some actions taking place,” he says. “Brexit has meant that we are putting in a lot more resources to make sure that the diversification process is faster.”

But as Dairygold has discovered, there will be obstacles to overcome at home as well.

“They’re like a Rottweiler,” says Deady, the local resident in East Ferry, when asked if the locals would allow the company’s Jarlsberg investment to go ahead. “When they grab on to you they won’t let go.”

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François P

Realistic and dynamic chaps. Yea, for sure Brexit won’t be easy for them.

Posted on 5/7/18 | 6:57 AM CEST

Dr Orthogonal

Blessed are the cheesemakers (even if they don’t know that Emmental is a Swiss thing rather than a French thing – the clue is in the name).

Posted on 5/7/18 | 9:24 AM CEST

Latimer Alder

A simple answer for the farmers…

Persuade the cringing Irish governmet to stand up for Ireland’s interests in a frictionless border.

Rather than be M Barnier’s tame poodle on the topic.

If I were an Irish patriot I’d be steaming mad that they are so spineless.

Posted on 5/7/18 | 9:25 AM CEST

Steuersklav Erei

An EU-UK free trade agreement would be the most ambitious ever in terms of foodstuffs. The UK would offer the EU pretty much 100% access to its market. Even though this still isn’t as good as a customs union from the EU’s perspective, it would help Irish indigenous industry immensely.

Alas, this is not to be. The Republic of Ireland is going to fall victim to the EU’s ‘no-negotiation’ strategy.

Posted on 5/7/18 | 9:56 AM CEST

-> tpk

WTO with tarifs can not happen, only if in all three sides would drop to the brain and aggression level of Trump:

– Forums Brexiteers favourite: WTO and border open -> no tarifs for RoI
– UK implements Custom checks between NI or between NI and Britain. Needs years of preparation, and why not combine that with the zero FTA?

No deal with a border and WTO is in nobodies interest, not EU, not RoI, not UK. Why should that ever happen?

Because EU uses the border as a leverage? EU and RoI can only use the border as leverage because UK allows them to. As soon as UK drops it’s own no border promise, the leverage drops dead.

Posted on 5/7/18 | 10:20 AM CEST

Steuersklav Erei

@ tpk

The UK has never made a ‘no border’ promise. It would sound very ominous to be honest. The Republic of Ireland is a sovereign state and the UK preaching ‘no border’ would sound like Putin and the Crimea!

That said, the UK is committed to no physical border at the actual border with the Republic of Ireland. There is already no border for people (thanks to the Common Travel Area) and tariff and regulatory checks will take place virtually or away from the actual border.

Posted on 5/7/18 | 10:42 AM CEST

François P

@Steuer

“That said, the UK is committed to no physical border at the actual border with the Republic of Ireland. There is already no border for people (thanks to the Common Travel Area) and tariff and regulatory checks will take place virtually or away from the actual border.”

This isn’t what the UK government has committed to. Below an extract of May’s Mansion House speech. It doesn’t leave much room for ambiguity.

“We have been clear all along that we don’t want to go back to a hard border in Ireland. We have ruled out any physical infrastructure at the border, or any related checks and controls. But it is not good enough to say, ‘We won’t introduce a hard border; if the EU forces Ireland to do it, that’s down to them’. We chose to leave; we have a responsibility to help find a solution.”

Posted on 5/7/18 | 11:00 AM CEST

-> tpk

@Steuersklave

May has been very strong until now with her no border promise. Pure electronics should be a myth and doing customs control not at the border but somewhere behind is just getting flexible with words. I and many others would take that as a breach of the promise. But much more important: UK has made the promise because it wants to avoid a physical border for good – so to say selfish – reasons. If there is danger of troubles than moving the controls a bit inside NI will not help avoiding the troubles.

Posted on 5/7/18 | 11:05 AM CEST

Steuersklav Erei

@ François P

That extract from May’s Mansion House speech confirms what I wrote. There will indeed be no physical infrastructure on the border, nor any checks or controls. Obviously this means the UK side of the border. The UK certainly does have a responsibility to help the EU with its side of the Irish border. But utlimately the UK has no powers to change EU Treaty Law requiring hard customs and regulatory frontiers against ‘third countries’, so ultimately it is the EU’s responsibility.

Posted on 5/7/18 | 11:33 AM CEST

Steuersklav Erei

@ tpk

There is no real prospect of political violence returning in an organised fashion in Ireland. The EU has been trying to stir up trouble in this fashion in order to gain leverage. But its attempts have failed.

Posted on 5/7/18 | 11:38 AM CEST

François P

@Steuer

“But utlimately the UK has no powers to change EU Treaty Law requiring hard customs and regulatory frontiers against ‘third countries’, so ultimately it is the EU’s responsibility.”

Exactly the reverse of what May said.

Posted on 5/7/18 | 11:48 AM CEST

François P

@tpk

“doing customs control not at the border but somewhere behind is just getting flexible with words”

Exactly. That is the game that the Brexit Talibans are playing.

Posted on 5/7/18 | 11:50 AM CEST

Steuersklav Erei

@ François P

I don’t understand. Are you saying that the UK should have the power to change EU law on regulatory and customs frontiers? That sounds like ‘cherry-picking’ to me.

Posted on 5/7/18 | 11:51 AM CEST

Steuersklav Erei

@ François P

‘Brexit Talibans’

So where should border checks be placed? You seem to be implying that there should be no border at all. I think you would have a hard job convincing the EU of this. Since its encarnation the EU has been obsessed with erecting borders against non-EU states (customs union, Schengen).

Posted on 5/7/18 | 11:55 AM CEST

Ghost of JB

@-> tpk @Steuersklaverei

“Pure electronics should be a myth and doing customs control not at the border but somewhere behind is just getting flexible with words. I and many others would take that as a breach of the promise”

I’m sorry, but far from a myth, using electronics and doing checks elsewhere is exactly what the UK currently does in Northern Ireland for VAT, excise duties, income tax etc.

And, sadly, too bad if you view this as cheating in some way, but the EU and UK are subject to the rule of law, not opinion. To counter this though you might encourage the EU to discuss trade as an FTA can make all this disappear…

Posted on 5/7/18 | 12:36 PM CEST

-> tpk

@Steuersklav Erei

“There is no real prospect of political violence returning in an organised fashion in Ireland. The EU has been trying to stir up trouble in this fashion in order to gain leverage. But its attempts have failed.”

YOUR politicians are all trying to avoid a border in Ireland. The recent in report in Guardian about the leaked solution with green and red channels said that this was a solution much preferred to a border inside the country.

YOU are begging EU help get a magically frictionless border.

Officially (!) UK has not moved one millimeter from its no border promise until now. That’s what EU and RoI are reacting to. That’s why EU has not bothered yet to even hint to what it would do if UK would set up a border.
The whole conundrum about the border is only possible because UK sticks to the no border (again: officially!).

Posted on 5/7/18 | 12:45 PM CEST

Steuersklav Erei

@ tpk

The red channel idea for EU/ROI transit through and trade with Great Britain does not require any EU help at all. All the UK has to do is enact it and then instruct the EU/ROI what it must do to comply with UK single market and customs union regulations. There is no begging going on here (at least not from the UK).

Posted on 5/7/18 | 2:03 PM CEST

-> tpk

@Steuersklav Erei

You completely misunderstood what I wrote. Only referred to the channel solution for the “much preferred to a border inside the country.”

The UK has 3 red lines in the moment:

– no border in Ireland
– no border in UK
– leaving SM and CU

EU has refused to help to you in maintaining all the 3 red lines at the same time.

EU has NOT answered the question what it would do if you drop the first red line (and custom checks behind the border is dropping that red line). Why: because UK has not officially taken that position yet. Only you. And perhaps Davis a week ago. But far from official.

Posted on 5/7/18 | 3:03 PM CEST

That's right

@Steuersklav Erei and all

It’s funny to watch the desperate, begging and impotent steu trying to sell bs in every comment, under every article. He goes so far as to steal terms proper to the European Union, such as Customs Union and Single Market. The UK has none of those. The have a customs, they have a market (bot extremely smaller). In his twisted way, the poor and hopeless steu tries to put the biggest economy and greatest political achievement of the world on the same level with the decadent, small to medium size uk.
You’re funny. You’re probably sick as well.

Your complete paranoia and inability to read what is written, understand what is said (even by your own politicians, thus in english, that I suppose is the only language you would “understand”) show how poor and simple you are. You waste time. You build no arguments and completely run from facts. And the main fact, is that the UK depends from the EU for more than half its economy, while the EU does not. The EU can walk away, the UK can’t. The UK is small, the EU is big. Can you start to grasp reality? Now go get your pills.

Posted on 5/7/18 | 3:12 PM CEST

Steuersklav Erei

@ tpk

I think we’re at risk of dancing on a pinhead of semantic differences. But I think there is certainly one area of confusion. I understand ‘no physical infrastructure/hard border’ to mean just that. I don’t think it means ‘no customs/regulatory checks’, and nor, apparently, does the British government.

Indeed there are regulatory and financial checks even now on the Irish border (different VAT rates, different free-floating currencies, weights and measures, etc.). Before 1993 there were also customs checks, too.

Posted on 5/7/18 | 3:18 PM CEST

Steuersklav Erei

@ That’s right

Well, that’s quite a tantrum you are throwing. If you persist in the highly intelligent ‘we are big, you are small’ argument, you might want to let the Irish know. Just remind them that the EU is big, Republic of Ireland is tiny, and that they can go f**k themselves.

Posted on 5/7/18 | 3:22 PM CEST

-> tpk

Steuersklav Erei

@ tpk

“I think we’re at risk of dancing on a pinhead of semantic differences.”

Must be something like that.

“But I think there is certainly one area of confusion. I understand ‘no physical infrastructure/hard border’ to mean just that. I don’t think it means ‘no customs/regulatory checks’, and nor, apparently, does the British government.”

ec.europa.eu/commission/sites/beta-political/files/joint_report.pdf

43. … The United Kingdom also recalls its commitment to the avoidance of a hard border, including any physical infrastructure or related checks and controls.

49. The United Kingdom remains committed to protecting North-South cooperation and to its guarantee of avoiding a hard border.

What you suggest, customs controls a short way away from the border is a breach of this agreement to my understanding. Perhaps you think the agreement is about avoiding fences, a DDR like border?

To my understanding it is about avoiding any disruption of the free flow of trade trough customs control, no matter if the hindrance is right at the border or in some distance of it. It’s about not hampering the inner trade of RoI and NI again.

UK is still infighting on how to achieve this. If UK would be fine with having customs control somewhere in NI, we would have the FTA half finished by now.

Posted on 5/7/18 | 4:00 PM CEST

Steuersklav Erei

@ tpk

Point 43 is consistent with no physical customs/regulatory checks at te border. Customs/regulatory checks will be virtual, and non-compliance by EU/ROI traders will result in physical checks (NOT on the border) and/or criminal investigations.

Point 49 is also clear. ‘North-South’ cooperation in Ireland has a specific meaning. The 3 areas of North-South cooperation are energy (already a non-EU/EEA competence), healthcare and agriculture. Agriculture is the big UK concession here (although some all-island regulations already exist which don’t exist in Great Britain).

But even though NI agriculture is pledged to maintain ‘regulatory alignment’ with the Republic of Ireland, there is nothing in the December agreement stating that this ‘alignment’ should be under the jurisdiction of the ECJ, nor is there anything about Northern Ireland being inside the EU tariff wall (EU customs union). The wording of the agreement pledges the UK to ‘respect the rules of the EU customs union’. That is very vague wording and the UK has interpreted it to mean respecting the external EU customs frontier which, naturally, will lie in the Republic of Ireland, not on UK territory. Thus any WTO tariffs will apply virtually (so there won’t be any disruption in trade flows).

Do you see the problem? The EU assumed that the December agreement was its green light to include Northern Ireland inside the EU customs union, Single Market and ECJ jurisdiction. That’s why 6 weeks ago the EU legal team produced a legal text to this effect, which was immediately rejected by the UK. The whole point of the EU judicial activism had absolutely nothing to do with ‘peace’ in Ireland or of free trade future relations with the UK. All the EU cared about was protecting the integrity of its single market and customs union. Any free trade agreement with the rest of the UK is and was completely secondary to this aim.

Now the UK has called the EU’s bluff. The UK is indeed going ahead with regulatory alignment in ‘North-South’ cooperation, while keeping Northern Ireland 100% outside the EU all the same. This is why the EU is furious and at a complete loss.

Posted on 5/7/18 | 4:42 PM CEST

-> tpk

@Steuersklav Erei

In the moment EU is not furious, only waiting. And UK is cooking its solution and still fighting about the ingredients. Your version sounds like a finished solution I never heard of.

Posted on 5/7/18 | 8:08 PM CEST

Steuersklav Erei

@ tpk

The problem is that the EU cannot afford just to wait. An EU external frontier is going to appear in Ireland in 10 months time. The UK has a provisional solution about how to manage its border. Its solution contains flaws and might not be 100% ready by March 2019, but a temporary failure to collect all tariff revenue is not going to present an existential crisis in the short term.

What solution does the EU have?

Posted on 5/7/18 | 10:18 PM CEST

Stan

@That’s Right
“And the main fact, is that the UK depends from the EU for more than half its economy”

In fact of course, That’s Wrong, it’s 13%.

Posted on 5/8/18 | 1:30 AM CEST

Klaus Wekx

Its the EUrophiles (and everyone in the RoI in particular) that I feel sorry for.

Posted on 5/8/18 | 6:58 AM CEST

-> tpk

@Steuersklave

What EU has? Theresa May!

“Mrs May objects that even run at a bare minimum this model [Max-fac] requires customs infrastructure, meaning Britain would be in breach of its commitment not to reintroduce a hard border with Ireland.”

From Times today.

Max-fac takes at least 3 years to prepare, what are you talking about? Feels like you are dreaming something up.

Posted on 5/8/18 | 7:58 AM CEST

blue bell

“In the moment EU is not furious, only waiting. And UK is cooking its solution and still fighting about the ingredients. Your version sounds like a finished solution I never heard of.”

The EU is waiting like a crème brûlée. All it needs is for the UK to find a bit of steel in the shape of a spoon to give it a good thwack to break the impasse and expose their soft yellow middle. LOL

Posted on 5/8/18 | 2:25 PM CEST

That's right

Steuersklav Erei

Except Ireland IS IN the EU, while you’re out. Good riddance

Posted on 5/8/18 | 7:00 PM CEST

Ghost of JB

@That’s right @Steuersklav Week

“Except Ireland IS IN the EU, while you’re out. Good riddance”

I think we all echo your statement about good riddance, though I’m not sure the first sentence makes sense. Both the UK and the Republic of Ireland are currently in the EU, although the UK has given notice that it intends to leave in ten months’ time.

If you are getting excited that the UK is leaving the EU and you can therefore proceed with plans to integrate member states further, then I think that you will find other member states will pick up our mantle of opposing the Franco-German stitch-up.

If you’re just happy to be rid of the UK and keeping Ireland then I suggest you stop trying to trash its economy in an attempt to undermine our exit.